This article develops an institutional explanation of news extortion—an important form of media corruption—by incorporating the connection between macro-, meso-, and micro-level factors into analysis. It argues that China’s uneven media reform and the rise of new media have created a conflict-riven and highly competitive environment that demands traditional media organizations to adopt the strategy of decoupling, namely the creation and maintenance of gaps between formal policy and actual organizational practice, to ensure organizational survival. An in-depth case analysis of the 21st Century Business Herald, a leading business newspaper whose website was ultimately shutdown by Chinese authorities due to extortion allegations, offers insights into how media organizations respond to an increasingly hostile environment by adopting the policy-practice decoupling strategy: distorting formal policies (e.g. the prohibition of paid news and the maintenance of a ‘firewall’ between editorial and advertising) in daily practice. Such a strategy, although furthering internal organizational efficiency, results in a prevalence of journalistic misconduct including ‘paid-for news’ and news extortion.

This article develops an institutional explanation of news extortion—an important form of media corruption—by incorporating the connection between macro-, meso-, and micro-level factors into analysis. It argues that China’s uneven media reform and the rise of new media have created a conflict-riven and highly competitive environment that demands traditional media organizations to adopt the strategy of decoupling, namely the creation and maintenance of gaps between formal policy and actual organizational practice, to ensure organizational survival. An in-depth case analysis of the 21st Century Business Herald, a leading business newspaper whose website was ultimately shutdown by Chinese authorities due to extortion allegations, offers insights into how media organizations respond to an increasingly hostile environment by adopting the policy-practice decoupling strategy: distorting formal policies (e.g. the prohibition of paid news and the maintenance of a ‘firewall’ between editorial and advertising) in daily practice. Such a strategy, although furthering internal organizational efficiency, results in a prevalence of journalistic misconduct including ‘paid-for news’ and news extortion.